THT Heat Transfer Technology, Inc. Announces Third Quarter 2013 Results Third quarter 2013 sales revenue totaled US$13.8 million, exceeding guidance PR Newswire SIPING, China, Nov. 13, 2013 SIPING, China, Nov. 13, 2013 /PRNewswire/ -- THT Heat Transfer Technology, Inc. (NASDAQ:THTI, "the Company", or "THT"), a leading provider of heat exchangers and heat exchange solutions in China'sclean technology industry, today announced its unaudited financial results for the third quarter ended September 30, 2013. Third Quarter 2013 Financial Highlights oSales revenue increased by 10.0% year-over-year to US$13.8 million. Sales revenue exceeded the Company's previously announced guidance of US$12.0 million to US$13.5 million for the third quarter 2013. oGross profit decreased by 17.7% year-over-year to US$4.3 million. oGross margin was 31.0%, compared to 41.4% for the third quarter 2012. oOperating income decreased by 6.0% year-over-year to US$0.8 million. oNet income attributable to common stockholders increased by 38.4% year-over-year to US$0.7 million. oBasic and fully diluted net income per share was US$0.03, compared with net income per share of US$0.02 for the third quarter 2012. Chairman and Chief Executive Officer Guohong Zhao commented, "Our third quarter sales revenue exceeded guidance despite the continued market challenges in China. Demand for our plate heat exchangers and heat exchanger units increased due to ongoing demand from the heating industry. However, these revenue gains were offset by cost increases in labor and raw materials, as well as mounting competitive pricing pressure, resulting in a decrease in gross profit. Nevertheless, as a consequence of our continued efforts to cut costs and lower expenses, we have realized a 38% year-on-year increase in net income for the third quarter." "As we move into the fourth quarter 2013 and fiscal year 2014, we expect industry and macroeconomic headwinds impacting our business to continue, with increased competition and production costs putting downward pressure on profit margins. In light of the continued economic downturn, we intend to focus our activities in a few key areas, namely sales to the heating industry – where market demand is still healthy, geographic expansion into Northwest China – where government development efforts are intense, and investment in overall research and development. We believe these efforts will position us well for future growth once market conditions improve." Third Quarter 2013 Financial Results Revenue Sales revenue for the third quarter 2013 was US$13.8 million, a 10.0% increase from US$12.5 million during the same period in 2012, primarily due to increased sales revenue from plate heat exchangers, heat exchanger units and air-cooled heat exchangers. Sales volume of heat exchange products totaled 421 units in the third quarter 2013, a decrease of 283 units from 704 units in the same period of 2012. Unit price increased this quarter as a result of customer demand for a greater number of special products with higher input costs. In terms of revenue breakdown for the third quarter 2013, sales revenue from plate heat exchangers increased by US$1.1 million, or 25.2%, to US$5.5 million from US$4.4 million in the same period of 2012. Sales revenue from heat exchanger units increased by US$0.7 million, or 14.5% year-over-year, to US$5.2 million from US$4.5 million. Sales revenue from air-cooled heat exchangers totaled US$0.4 million, an increase of 241.7% as compared with US$0.1 million in the third quarter 2012. During the third quarter 2013, sales revenue from shell-and-tube heat exchangers was US$0.6 million, a 74.0% decrease from US$2.2 million compared to the same period of 2012. Cost of Sales Cost of sales for the third quarter 2013 increased 29.6% year-over-year to US$9.5 million from US$7.3 million in the third quarter 2012. The increase was mainly attributable to an increase in costs to produce the special products. Gross Profit and Gross Margin Gross profit decreased 17.7% to US$4.3 million during the third quarter 2013, from US$5.2 million in the same period of 2012, mainly due to increased cost of sales. Gross margin was 31.0% for the third quarter 2013, compared with 41.4% during the year-earlier period, mainly due to an increase in labor costs and raw material costs associated with the special products. Operating Expenses Administrative expenses decreased 43.4% to US$1.3 million in the third quarter 2013, from US$2.4 million for the same period of 2012, primarily due to a decrease in bad debt expense in the third quarter of 2013. Research and development expenses increased 76.7% year-over-year to US$0.6 million, from US$0.3 million in the third quarter 2012, mainly due to an increase in the costs of raw materials used in research and development. Selling expenses decreased 4.4% to US$1.6 million for the third quarter 2013, compared with US$1.6 million during the same period of 2012, mainly due to a slight decrease in travelling expenses incurred by the Company's sales personnel. This resulted in total operating expenses of US$3.5 million in the third quarter 2013, decreased by 19.9% compared with US$4.3 million during the same period of 2012. Income before Income Tax Income before income tax was US$0.8 million in the third quarter 2013, compared with US$0.7 million in the same period of 2012. Income Tax Income tax decreased 24.5% to US$0.1 million in the third quarter 2013 from US$0.1 in the same period of 2012, mainly due to decreased prepayment of income tax in the third quarter of 2013. Net Income Net income attributable to common shareholders was US$0.7 million in the third quarter 2013, a 38.4% increase compared with US$0.5 million in the same period of 2012. Basic and fully diluted net income per share was US$0.03 in the third quarter 2013, compared with US$0.02 in the same period of 2012. Liquidity As of September 30, 2013, the Company had cash and cash equivalents of US$1.8 million and restricted cash of US$2.0 million. During the first nine months of 2013, there was a net cash outflow of US$8.9 million, compared with a net cash outflow of US$0.1 million in the same period of 2012. Net cash used in operating activities was US$4.5 million for the first nine months of 2013, compared with US$4.3 million for the same period of 2012. Net cash used in operating activities during the first nine months of 2013 increased compared to the same period in 2012, mainly attributable to a decrease in accounts receivable by $4.0 million, a decrease in bills receivable by $2.0 million, a decrease in other receivables, prepayments and deposits by $1.4 million, an increase in accounts payable by $2.9 million, offset by decreased income of $1.2 million, payments made to acquire inventories of $4.7 million, and an increase in other payables and accrued expenses of $3.3 million. Net cash used in investing activities was US$0.3 million for the first nine months of 2013, compared with US$1.1 million for the same period in 2012. The decrease in net cash used in investing was mainly due to a cash payment of $0.7 million to acquire land use rights during the nine months ended September 30, 2012, while no such payment was made to acquire land use rights during the nine months ended September 30, 2013. Net cash used in financing activities was US$4.3 million for the first nine months of 2013, compared with net cash provided by financing activities of US$5.3 million for the same period in 2012. The increase in net cash used in financing activities was mainly attributable to the increase of net repayment of short term loans by $9.4 million during the nine months ended September 30, 2013 as compared to the same period in 2012. Fourth Quarter 2013 Guidance THT expects to generate sales revenue in the range of US$28.0 million to US$35.0 million in the fourth quarter 2013, compared with US$27.6 million in the fourth quarter 2012. This represents the Company's preliminary view, and is subject to change. About THT Heat Transfer Technology, Inc. Through its Chinese operating subsidiaries, THT Heat Transfer Technology, Inc. designs, manufactures and sells plate heat exchangers, shell-and-tube heat exchangers, heat exchanger units and other heat exchanger products with total heat exchange solutions. Heat exchangersplayan integral part in helpingcustomers improve energy efficiency.Used in a number of industries, THT's products focus on energy conservation, emission reduction and other environmentally friendly applications.Its six major product categories are plate heat exchangers, shell-and-tube heat exchangers, air-cooled heat exchangers, weld plate heat exchangers, heat exchanger units and plate-and-shell heat exchangers. The Company also offers comprehensive heat exchange solutions. THT's in-house R&D capabilities enable it to deliver tailored products that better meet the changing demands of its customers. The Company has a strong record of delivering high-quality products and services to leading domestic and international customers. THT has completed over 3,000 projects and has provided heat exchange solutions to several Fortune 500 companies. The Company is headquartered in Siping City, Jilin Province, China. For more information, please visit the Company's website at www.tht.cn. Safe Harbor Statement This press release contains certain statements that may include "forward looking statements". All statements other than statements of historical fact included herein are "forward-looking statements". These forward-looking statements are often identified by the use of forward-looking terminology such as "believes," "expects" or similar expressions, and involve known and unknown risks and uncertainties. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the risk factor sections of the Company's periodic reports that are filed with the Securities and Exchange Commission and are available on its website (http://www.sec.gov). All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these factors. Other than as required under the securities laws, the Company does not assume a duty to update these forward-looking statements. Contact: The Company: Mr. Jack Xiao Investor Relations Manager THT Heat Transfer Technology, Inc. Tel:+86 (434) 326 6779 Email: IR@tht.cn Investor Relations (Beijing): Xiaoyan Su Taylor Rafferty Tel: +86 13718865807 Email: firstname.lastname@example.org Investor Relations (US): Roland Tomforde Taylor Rafferty Tel: +1 (212) 889 4350 Email: email@example.com - FINANCIAL TABLES FOLLOW - THT Heat Transfer Technology, Inc. Consolidated Balance Sheets As of September 30, 2013 and December 31, 2012 (Stated in US Dollars thousands) September 30,2013 December 31,2012 (Unaudited) (Audited) Assets Current assets Cash and cash equivalents 1,755 10,703 Restricted cash 2,035 1,838 Accounts receivable, net 36,103 37,683 Inventories, net 43,212 31,892 Other current assets 18,906 14,049 Total current assets 102,011 96,165 Long-term accounts receivable 1,149 1,237 Other non-current assets 13,878 14,067 Total assets 117,038 111,469 Liabilities Current liabilities Short-term bank loans 15,951 18,705 Other current liabilities 39,743 33,080 Total current liabilities 55,694 51,785 Long-term loan - 951 Total liabilities 55,694 52,736 Total shareholders' equity 61,344 59,311 Noncontrolling interests - (578) Total liabilities and equity 117,038 111,469 THT Heat Transfer Technology, Inc. Unaudited Consolidated Statements of Income (Stated in thousands of US Dollars, except number of shares and per share data) Three months ended September 30, 2013 2012 Sales revenue 13,761 12,508 Cost of sales (9,494) (7,326) Gross profit 4,267 5,182 Operating expenses Administrative expenses 1,348 2,383 Research and development expenses 557 315 Selling expenses 1,566 1,637 Total operating expenses 3,471 4,335 Operating income 796 847 Interest income 4 7 Other income 268 283 Finance costs (277) (475) Other expense - - Income before income taxes 791 662 Income taxes (94) (124) Net income before noncontrolling interests 697 538 Net (loss) income attributable to - (34) noncontrolling interest Net income attributable to the equity 697 504 stockholders Earnings per share attributable to THT Heat Transfer Technology, Inc. common stockholders $0.03 $0.02 Weighted average number of shares outstanding - Basic and diluted 20,453,500 20,453,500 THT Heat Transfer Technology, Inc. Unaudited Consolidated Statements of Cash Flows For the nine months ended September 30, 2013 and 2012 (Stated in US Dollars thousands) Nine months ended September 30, 2013 2012 Net cash used in operating activities (4,530) (4,338) Net cash provided by (used in) investing (262) (1,121) activities Net cash provided by (used in) financing (4,342) 5,311 activities Effect of exchange rate changes on cash and 186 42 cash equivalents Net decrease in cash and cash equivalents (8,948) (106) Cash and cash equivalents at beginning of the 10,703 7,340 period Cash and cash equivalents at end of the period 1,755 7,234 SOURCE THT Heat Transfer Technology, Inc. Website: http://www.tht.cn
THT Heat Transfer Technology, Inc. Announces Third Quarter 2013 Results
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